New EU regime for comparative ads

By 12 December 2007 all EU member states were obliged to implement a new, consolidated directive on misleading and comparative advertising and thereby scrap the existing regime for comparative advertising as it affects consumers. Come again? Stephen Groom reports.

Topic: Comparative advertising

Who: European Commission

When: 12 December 2007

Where: Brussels

Law stated as at: 2 January 2008

What happened:

Quietly and unobtrusively, a EU measure came into force, which could potentially have a seismic effect on the laws of all EU member states governing comparative advertising.

The measure was "Directive 2006/114/EC concerning misleading and comparative advertising (codified version)," but this description is itself misleading.

This Directive ("the 2006 Directive") does not simply "codify" existing EU Directives affecting comparative and misleading advertising. It arguably goes beyond this by changing key parts of the original Directive 84/450/EEC (dealing with misleading advertising) as previously amended by Directive 97/55/EC so as to extend to comparative advertising.The first significant departure is in the stated purpose of Directive 2006. In the previous '84 and '97 Directives this was

"to protect consumers, persons carrying on a trade or business and the interests of the public in general against misleading advertising and the unfair consequences thereof and to lay down the conditions under which comparative advertising is permitted."

Now this has been "codified" to delete the reference to "consumers" and "the interests of the public in general", so the new Article 1 states that the purpose of the 2006 Directive is to:

"protect traders against misleading advertising and the unfair consequences thereof and to lay down the conditions under which comparative advertising is permitted."

Does this mean that the whole Directive is now only to protect "traders" or is the correct interpretation to read the two parts disjunctively, so that the laying down of conditions under which comparative advertising is permitted is quite separate and not specifically for the purpose of protecting traders?

The preamble to the Directive suggests the latter, since none of its "Whereas" provisions referring to comparative advertising restrict the directive's ambit to protecting the interests of traders only. Do the substantive provisions of the new Directive shed more light?

Directive points both ways on crucial issue

Yes they do but they point in the other direction.

Article 4 (1) of the 95 Directive required Member States to ensure:

"that adequate and effective means exist ……..for the compliance with the provisions on comparative advertising in the interests of consumers as well as competitors and the general public"

In contrast the "codified" equivalent Article 5 (1) of the 2006 Directive states that the means in question must be only"in the interests of traders and competitors."

What about the detailed requirements for legal comparative advertising?

These remain largely the same except that:

the "not misleading" rule used to refer only to the "misleading advertising" provisions of the same, 95 Directive, whereas now there is an additional reference to the relevant provisions of the Unfair Business to Consumer Commercial Practices Directive 2005/29/EC ("UBCCPD")

the "does not create confusion" rule used to refer to confusion "in the marketplace between the advertiser and a competitor or between the advertiser's trade marks, trade names, other distinguishing marks, goods or services of a competitor". Now the equivalent provision refers only to confusion "amongst traders" and not to "confusion in the marketplace."

What does all this mean?

Potentially significant impact. As previously reported on marketinglaw.co.uk, the true meaning could be very significant.This is because the measure that supposedly drove these changes, the exclusively consumer facing UBCCPD, contains none of the detailed comparative advertising requirements that are set out in this new "codifying" 2006 Directive and are currently regarded by the UK courts as a touchstone for determining whether a competitor's registered trade mark as used in a comparative ad might infringe that registration.

These include the requirement that the advertisement "objectively compares one or more material, relevant, verifiable and representative features.." and "does not discredit or denigrate the trade marks, trade names, other distinguishing marks, goods, services, activities or circumstances of a competitor".

Stark choice

There are two stark choices as to the possible impact of this new "codifying" directive. Either the detailed requirements for legal comparative advertising in Europe no longer apply to advertising targeted at consumers and only apply to such ads aimed at "traders", or, in the spirit of the important, ambit-fixing Article 1 of the 2006 Directive, Europe's rules for comparative advertising remain largely unchanged from Directive 95/55/EC and still apply to B2C advertising as well as B2B.

Which way we are heading on this and what the choice will finally be remains unclear.

Why this matters:

Surprisingly this burning question has so far been largely ignored by commentators. This, despite its potential impact on years of case law built up since the Trade Marks Act 1994 on the question of whether registered trade marks can be infringed in comparative advertising, regardless of whether it is B2C or B2B.

So far the UK government seems content to go the way of narrowing the relevance of the comparative advertising rules to B2B. So much is suggested by their utterances to date on the proposed Business Protection from Misleading Marketing Regulations, due to come into force in April 2008 alongside the Consumer Protection from Unfair Trading Regulations, the principal measure implementing the UBCCPD in the UK.

It is true to say that for other, quite separate reasons due to come before the European Court of Justice within the next year, there is currently considerable doubt about the interaction between Europe's existing rules for (B2C and B2B) comparative advertising and its laws on trade mark infringement (see previous marketinglaw reports on the continuing O2/3 case). Be that as it may, is the UK Government's current approach on this issue correct given the ambiguous provisions of the underlying "codifying" 2006 Directive?

And what logic is there in disapplying from B2C advertising the now long established rules for comparative advertising, but retaining them for advertising directed at traders? And how we are to judge when an advertising communication is aimed only at traders?